How is a lack of supply impacting on the UK property market?

The UK's housing market shows no sign of slowing down: but supply is woefully inadequate.

Despite regular forecasts for austerity, the UK property market is continuing along an upward trajectory. Even the build-up to the general election failed to dampen the nation’s appetite for real estate, with the demand for homes soaring despite inflated price points.

While fears remain that continued growth could drive prices beyond the reach of everyday buyers, however, there are no signs of this occurring any time soon.

So what exactly is causing this continued and impressive growth? Many experts believe that it is a paucity of housing supply, with the number of homes being listed on the market far lower than the corresponding demand.

So while the average stock of homes for each surveyor fell to record low in June, for example, demand edged upwards for a second consecutive month while prices continued to soar. With fewer houses on the market, vendors are able to inflate the price of their properties and drive a far harder bargain.

This was reflected in May’s figures, with an article in Property Rescue revealing that prices had risen by 1.4 per cent during a four-week period. This elevated the average cost of a British home to £212,495, although it is fair to say that this figure includes distorting price points from London.

A lack of housing supply has certainly helped to inflate these prices further, however, with vendors able to use market forces to trigger a lucrative bidding war when they have two or more prospective buyers. In terms of the immediate future, this trend looks set to continue indefinitely. 

Significantly, a recent survey by the RICS claimed that 41 per cent of surveyors expect house prices to grow over the next three months, which represents the highest proportion since the recent boom began back in April 2014. The current level of growth will probably continue beyond this point, until prices can no longer be sustained by the market.

Tumbling mortgage rates and a prosperous labour market have also contributed to the recent growth, while these factors are also laying the foundations for longer-term expansion.

Related Topics


Leave a comment